With little or no electricity, fuel in short supply and violent crime rampant, hundreds of residents burned tires and threw stones at British troops earlier this month in a city that had been largely peaceful. Two demonstrators and a private security guard were killed in two days of rioting.

Since then, coalition forces have sharply reduced the once days-long lines at gas stations by distributing large amounts of fuel. Electrical service has improved, and in October a key oil refinery is scheduled to get two generators that will allow it to operate without relying on the crippled national electrical grid.

In addition, coalition forces have intensified efforts to stop the sabotage, looting and smuggling that officials blame for exacerbating the shortages.

Coalition remains focused

Steve Bird, spokesman for the southern branch of the Coalition Provisional Authority, called the rioting in Basra a "setback" but said "it's not going to distract us from our work."

"These people have had a long history of difficulty," he said. "They want to live in peace and quiet and get their city back up and running."

But many residents said they have already lost faith in the coalition's ability to improve their lives despite the recent advances. Signs of despair are everywhere in Iraq's second-largest city.

An unemployed former soldier now joins other black marketeers earning $2 or $3 a day hawking smuggled gasoline on street corners. Because of frequent power outages, a physician sleeps with his family on their rooftop to escape the intense heat but finds himself ducking random gunfire.

Meshaal Mohammed, owner of an electronics store, said business has fallen as much as 70 percent since British forces took over Basra four months ago. Mohammed emptied his store of refrigerators, air conditioners, stoves and other appliances during the rioting to prevent gunmen from cleaning him out.

"Without electricity, we can't sell anything," said Mohammed, an assault rifle at his side. "Maybe it will get better. Maybe it will get worse. We don't know. We are afraid."

More violence could follow

The sense of hopelessness and desperation is a stunning reversal in this city that initially embraced British and other coalition forces and could signal the beginning of a difficult and potentially violent period ahead.

After weeks of calm, one British and one Danish soldier were recently killed in southern Iraq. British forces who once patrolled Basra in bush hats and fatigues now wear combat helmets and body armor. Czech soldiers said residents pelt them with stones and shout obscenities whenever they leave their compound.

Already there are some indications that Saddam Hussein loyalists and radical Shiite Muslims are trying to tap into the discontent to further undermine coalition efforts, coalition officials say.

Bird said he believes there was a certain level of organization behind the demonstrations as trucks dropped off piles of tires that were later set aflame. A local Shiite organization called the Fudhala Group distributed leaflets saying the coalition was withholding basic services so it could occupy Iraq indefinitely.

Sheik Sabah Al-Saadi, general secretary of the Fudhala Group, said his organization counseled calm during the demonstrations even as he warned of future violence if basic services fail to improve in Basra.

"They say that they are coming here as a liberation force, but the people are living worse than under Saddam's regime," Al-Saadi said. "If we lose our patience and we can't control the people, it will be the fault of the Americans and the British."

Bird and other officials said one reason Basra's residents are so impatient is that they have suffered so long.

Over the years, Hussein--a Sunni Muslim--was responsible for the slaughter of tens of thousands of Shiites who opposed his rule and represent the majority of the city's population. The bloodbath culminated in the aftermath of the 1991 Persian Gulf war, when Hussein ruthlessly suppressed a Shiite uprising in Basra and then largely left the city in ruins.

Looters sacked Basra during Hussein's ouster, but the coalition managed to set up a local town council, train a new police force and get the courts running. Until this month, not a single British soldier patrolling Basra had been killed since President Bush declared major combat over May 1.

Then, two weeks ago, the city came to a virtual halt as looters tore down electrical lines and a breakdown occurred at a major power station. Electricity--once available for up to 20 hours a day--was cut for several days. That slowed production at Basra's main oil refinery, leading to gasoline and diesel shortages.